Bond fund flows losing momentum, reports EPFR Global
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Inflows to bond funds are losing momentum as the search for safety continues to force yields down, according to the latest data from EPFR Global.
The fund flows and asset allocation data providers says inflows to the bond funds it tracks amounted to $1.5 billion (£970m) in the week to May 30. This is the lowest level of inflows in 24 weeks.
“Flows into EPFR Global-tracked bond funds continued to lose momentum during the final week of May as the search for safety pushed yields from the safest asset classes closer to - or even into - negative territory,” the company reports.
US bond funds - especially US inflation protection, long-term government and corporate bond portfolios - mortgage-backed bond funds and global bond funds saw net inflows over the week, while net outflows hit high-yield and emerging market bond funds.
Other fund flow trends over the last week included investors continuing their search for safer havens.
Although equity funds won net inflows of $6.2 billion, this was entirely owing to flows into US equity funds. In fact, half of the total went into one S&P 500 index fund.
Money market funds took in a net $2.2 billion over the week, with redemptions from European funds largely offsetting the flows into US products.
Cameron Brandt, research director at EPFR Global, says: “Redemptions still haven’t hit the levels seen last August.
“That may be due in part to the fact that flows are currently dominated by institutional investors. The retail investors who fled during the third quarter of 2011 have stayed away.”
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